Wells Fargo just agreed to pay the largest fine ever imposed by the CFPB. But there’s still a nine-figure payday in the offing for the exec whose unit’s misbehavior brought about the fine
Wells Fargo may be in trouble, but the executive in charge of the unit that caused the bank’s headaches seems to be leaving the bank with a giant payday.
Wells Fargo just agreed to pay $185 million -- including the largest fine ever imposed by the CFPB – to settle claims that it defrauded its customers. But Carrie Tolstedt, the executive in charge of the unit where the fraud occurred, is leaving the bank with a $124.6 million golden parachute, according to a Fortune report.
Employees in Tolstedt’s unit opened more than 2 million customer accounts – largely without the knowledge or authorization of the customers involved. The practice, known as “sandbagging,” was apparently a routine tactic to drive up sales numbers and earn compensation incentives. Wells Fargo said it had fired 5,300 employees over five years for sandbagging, according to Fortune.
But Tolstedt is departing with $124.6 million in stock and options, according to NPR. And her compensation during the five years the CFPB targeted for investigation included a yearly incentive of $5.5 million in stock – in addition to base pay and bonuses. And despite “clawback” provisions instituted by Wells Fargo in the wake of the financial crisis, the bank does not appear to be moving to force Tolstedt return any of her pay, Fortune reported.
A spokesperson for the bank said Tolstedt’s departure was a result of her own decision to retire after 27 years, according to Fortune. And Wells Fargo CEO John Stumpf said Tolstedt had been “a standard-bearer of our culture” and “a champion for our customers.”
CFPB head Richard Cordray, however, had harsh words for the unit’s incentive programs, which he said encouraged employees to open the unauthorized accounts. According to Cordray, “financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
At the same time, it’s not clear if Tolstedt was aware of the widespread fraud at her unit, Fortune reported. The CFPB did not name her directly in its investigation. Nor did the Los Angeles City Attorney’s Office, which sued the bank over the matter. But a CFPB official said that Wells Fargo itself was aware of the practice of sandbagging for longer than it should have been without stopping it.
Wells Fargo just agreed to pay $185 million -- including the largest fine ever imposed by the CFPB – to settle claims that it defrauded its customers. But Carrie Tolstedt, the executive in charge of the unit where the fraud occurred, is leaving the bank with a $124.6 million golden parachute, according to a Fortune report.
Employees in Tolstedt’s unit opened more than 2 million customer accounts – largely without the knowledge or authorization of the customers involved. The practice, known as “sandbagging,” was apparently a routine tactic to drive up sales numbers and earn compensation incentives. Wells Fargo said it had fired 5,300 employees over five years for sandbagging, according to Fortune.
But Tolstedt is departing with $124.6 million in stock and options, according to NPR. And her compensation during the five years the CFPB targeted for investigation included a yearly incentive of $5.5 million in stock – in addition to base pay and bonuses. And despite “clawback” provisions instituted by Wells Fargo in the wake of the financial crisis, the bank does not appear to be moving to force Tolstedt return any of her pay, Fortune reported.
A spokesperson for the bank said Tolstedt’s departure was a result of her own decision to retire after 27 years, according to Fortune. And Wells Fargo CEO John Stumpf said Tolstedt had been “a standard-bearer of our culture” and “a champion for our customers.”
CFPB head Richard Cordray, however, had harsh words for the unit’s incentive programs, which he said encouraged employees to open the unauthorized accounts. According to Cordray, “financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
At the same time, it’s not clear if Tolstedt was aware of the widespread fraud at her unit, Fortune reported. The CFPB did not name her directly in its investigation. Nor did the Los Angeles City Attorney’s Office, which sued the bank over the matter. But a CFPB official said that Wells Fargo itself was aware of the practice of sandbagging for longer than it should have been without stopping it.
